Cipla Q1 net profit beats estimates, up 17%

Pharmaceutical major Cipla Ltd. reported better-than-expected consolidated net profit on Friday ₹1,177.64 crore in the April-June quarter, up 17% year-on-year on account of favourable product mix and other operational improvements.

Consolidated revenues for the quarter amounted to ₹6,694 crore, up 7% year-on-year. Analysts polled by Bloomberg had forecast revenue of ₹6792 crore and net profit of ₹1,122 crores.

Cipla’s earnings before interest, tax, depreciation and amortisation (EBITDA) stood at ₹1,716 crore for the quarter ended June 30, up 14% year-on-year (YoY) with an operating margin of 25.6%.

“I think the Indian market should continue to grow at a rate of 10%. This time we had an aggressive summer and I think that’s why we haven’t seen as much growth in the acute category as we would have expected… We think the seasonal triggers are there and we should see some growth,” Umang Vohra, managing director and global CEO, Cipla, said in a conference call.

Vohra stressed that the company is focused on expanding its core markets, strengthening its flagship brands and investing in new therapeutic areas such as obesity and mental health. “We mainly deal with movement disorders, including Parkinson’s disease, neurological disorders, epilepsy and migraines. Currently, we do not have a full-blown psychiatry, that will come later,” he said, underlining the company’s plans to expand its portfolio in these areas.

“I believe that the psychiatry market is ₹3,000 crore in India, while the movement disorders and epilepsy market in the country is valued at around ₹1200 to ₹“A total of Rs 1,300 crore,” he noted.

Cipla said its net cash position stood at ₹8,449 crore as on June 30, with total debt at ₹547 crore. The company has allocated ₹An estimated Rs 353 crore, or 5.3% of sales, was spent on research and development related to product submissions and development activities.

Vohra added that Cipla is actively considering acquisitions in India and other key markets like the US, South Africa and Brazil, especially in the consumer and branded products space.

“We are always looking for acquisition opportunities, but at the same time we are very conscious of the value we are paying,” he added.

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One India’s business segment recorded a solid 10 per cent growth across prescription drugs, generics and healthcare products.

However, this growth was partially offset by a decline in generics, attributed to a change in distribution models. The branded prescription business, supported by chronic therapies such as respiratory, cardiology and orotherapy, outpaced market growth, while the consumer health franchise grew 3% year-on-year. Key brands such as Nicotex, Omnigel and Cipladine achieved leadership positions in their segments.

Cipla also announced the successful transition of its Indian generics business to a new distribution model, increasing the control and involvement of the direct distributor. The US business reported record quarterly revenues of $250 million, and the South African market saw a solid year-on-year growth of 19% in local currency, led by the private market segment.

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Earlier in the day, mutual fund HDFC Mutual Fund marginally increased its stake in Cipla by 0.2 per cent to a total of 5 per cent through open market purchases, reflecting investor confidence in the company’s growth trajectory and strategic initiatives.

Prathamesh Masdekar, Research Analyst at StoxBox, noted that Cipla continued to report strong financial results, underlining its key business strengths in India, North America and South Africa.

Cipla is expected to focus on building a solid growth foundation in the coming quarters, driven by continued leadership in chronic therapies in the Indian branded prescription medicines business, growing differentiated portfolio in the US with plans to launch peptide products in FY25, strong demand from private business in South Africa and continued leadership in prescription medicines.

Additionally, Cipla is investing in its future pipeline and addressing regulatory issues at its Goa facility, keeping in mind its positive long-term growth prospects, he added.